The recent rise of Sears Holdings (SHLD) has been largely attributed to the sales and value of its real estate, as well as the dealings of Eddie Lampert. Lampert is known for having a concentrated portfolio and does not haphazardly jump into a stock without having a purpose in mind. So why did Lampert begin acquiring shares of iStar Financial (SFI) in the third quarter of 2011? In the fourth quarter it was the only stock that he did not reduce, but in fact, increased.
iStar Financial focuses on lending, net leasing, and real estate investment; primarily commericial but they do some high end residential as well. The 3.5% position that Lampert holds is hardly enough to start takeover rumors, but one has to wonder the reasoning behind Lamperts decision. The combination of his move to capitalize on Sears real estate and his new position in a commercial real estate company is quite intriguing.
One of SFIs major announcements in their fourth quarter earnings report was that they secured a $900 million dollar senior secured credit facility arranged by Barclays Capital. If I'm connecting the dots between SFI and Lampert I would mention that one of the callers during the SHLD Q&A for their fourth quarter earnings was Emily Shanks from Barclays Capital, who asked a question about their real estate sales. Shanks is a Managing Director at Barclays and a former Vice President at Lehman Brothers.
Going further, an Executive Vice President of iStar, R. Michael Dorsch III, was formerly a principal at Acre Partners, a real estate investement firm run by Eddie Lamperts fund, ESL. Lampert has not made any public statements with regards to iStar but perhaps there is a future link between the recent dissolvement of Acre Partners and his growing stake in SFI.
The question is, does Lampert see SFI as a beaten down value opportunity like the contrarian investor that he is, or did he invest because he has plans to do future business with them and knows he can profit from their rise?
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SFI over the next 72 hours.